Quantitative Aptitude

Simple and Compound Interest

3,394 Questions
All Simple interest and its inverse forms 768 Compound interest with annual compounding 742 Simple-interest growth and split sums 626 Difference between compound and simple interest 479 Half-yearly and quarterly compounding 252 Changing rates and fractional years 201 Installments (CI based) 190 Ratio of principal to interest 118 Population growth and depreciation 16

Simple and Compound Interest Questions

Multiple choice

Mungeri Lal has two investment plans- A and B, to choose from. Plan A offers interest of 10% compounded annually while plan B offers simple interest of 12% per annum. Till how many years is plan B a better investment?

  1. 3

  2. 4

  3. 5

  4. 6

  5. 7
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let P be the principal. Plan A amount = P * (1.1)^n. Plan B amount = P * (1 + 0.12n). We want P * (1.1)^n < P * (1 + 0.12n). For n=3: 1.331 < 1.36 (True). For n=4: 1.4641 < 1.48 (True). For n=5: 1.61051 > 1.60 (False). Thus, it is better for 4 years.

Multiple choice

Find the simple interest (in Rs.) in all the three cases, if (i) P = Rs. 2500, R = 15% per annum and T = 4 years (ii) P = Rs. 800, R = 9% per annum and T = 4 months (iii) P = Rs. 3000, R = 6% per six months and T = 6 years

  1. 1500, 24, 2160

  2. 1500, 24, 2170

  3. 1500, 20, 2170

  4. 1515, 24, 2160

  5. 1200, 25, 2000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

(i) SI = (2500 * 15 * 4) / 100 = 1500. (ii) SI = (800 * 9 * (4/12)) / 100 = 24. (iii) SI = (3000 * 12 * 6) / 100 = 2160. Note: 6% per six months is 12% per annum.

Multiple choice

What is the difference between the interests earned, when Rs. 100 was deposited under a recurring deposit scheme for three years at 8% p.a. and Rs. 3,600 under simple interest scheme at the same rate of interest for the same period?

  1. Rs. 864

  2. Rs. 444

  3. Rs. 420

  4. Rs. 1,308

  5. Rs. 24
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Recurring deposit interest: P = 100, n = 36 months, r = 8%. Interest = P * (n(n+1)/2400) * r = 100 * (36*37/2400) * 8 = 444. Simple interest: P = 3600, t = 3, r = 8%. Interest = (3600 * 8 * 3) / 100 = 864. Difference = 864 - 444 = 420.

Multiple choice

Find the difference between the interests earned, when Rs. 200 was deposited under a recurring deposit scheme for three years that gives 8% simple interest and Rs. 2,400 is deposited under CI scheme that offers 10% p.a.interest compounded bi-annually for three years.

  1. Rs. 72

  2. Rs. 60

  3. Rs. 53.33

  4. Rs. 64.67

  5. Rs. 90
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

For the recurring deposit: Interest = P * n * (n+1) / 2 * r / 1200. With P=200, n=36, r=8%, interest = 200 * 36 * 37 / 2 * 8 / 1200 = 888. For the CI scheme: P=2400, r=10% compounded bi-annually (5% per 6 months) for 3 years (6 periods). Amount = 2400 * (1.05)^6 = 3215.57. Interest = 3215.57 - 2400 = 815.57. The difference is 888 - 815.57 = 72.43, which is closest to 72.

Multiple choice

Ash opens a savings account in a bank with the annual interest rate of 16%. If she deposits Rs. 8,000.00 in the account and the interest is compounded quarterly, then how much interest will she earn after 1 year?

  1. Rs. 960

  2. Rs. 1,000

  3. Rs. 1,020

  4. Rs. 1,359
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Principal = 8000, Rate = 16% per annum, compounded quarterly (4% per quarter). Time = 1 year (4 quarters). Amount = 8000 * (1 + 0.04)^4 = 8000 * 1.16985856 = 9358.87. Interest = 9358.87 - 8000 = 1358.87, which rounds to 1359.

Multiple choice

Vinod invested Rs. x compounded for 2 years at m% and n%, respectively. What are the possible values of m and n if, in these two years, the sum amounts to Rs. 462 and simple interest after investing the initial sum of Rs. x at m% is less than Rs. 10? (i) m = 2% and n = 3% (ii) m = 3% and n = 4% (iii) m = 1% and n = 3% (iv) m = 5% and n = 10% (v) None of these

  1. (ii) and (iv)

  2. (i) and (iv)

  3. (i) and (iii)

  4. (i), (ii) and (iii)

  5. (iii) and (v)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Amount = x(1 + m/100)(1 + n/100) = 462. Testing (i): x(1.02)(1.03) = 462 => x(1.0506) = 462 => x = 439.75. Simple interest = 439.75 * 0.02 = 8.795 < 10. This fits.